Muda Holdings Bhd, a pioneer in producing paper and the paper packaging industry, is embarking on an RM90mil investment plan to produce machine glazed paper widely used for the food packaging sector.
Chairman Tan Sri Lim Guan Teik said the group was now in the first phase, of which RM34mil has been pumped in to build a new 100,000-sq-ft outfit to house three new pieces of machinery to make glazed paper.
“We saw the rising demand for glazed paper, particularly to wrap or package food.
“More so when the food packaging industry is recession-proof, we see the need to expand our product line,” he said after the company’s AGM here yesterday, adding that the new plant was located within the vicinity of its Tasek Mill in Simpang Ampat, Penang.
Now on a trial run, Lim expects the outfit to commercially run on July 1. This will be followed by the second phase, which will see completion by July 2016.
Once all the three machines were fully commissioned, the plant could produce up to 60 tonnes of glazed paper a year, Lim said, adding that the group hoped to better its margin by 5% to 10% with the new product.
About 80% of the stock will be pushed for the export market.
During the AGM, shareholders raised the issue of its low share price, to which Lim said that it was beyond the group’s control.
The group had no plans to boost the liquidity of its share price.
Lim, who is the largest shareholder of the company with 41.5%, said sales had dropped by 10% in April and May due to the goods and services tax (GST).
“We did very well in the first quarter, as there were more orders than usual before the GST.
“We think that sales will be slower in the next few months,” he said.
Apart from this, Lim lamented that the new gas tariff revision by the Government had made it quite tough for the group, more so against the backdrop of a volatile market.
Although its sales were denominated in the Australian and US dollars, he said, the operations relied on utilities like gas and electricity, aside from the exchange rates as well as the interest rates.
“Unlike the glove industry, it is not easy for us to pass the cost on to customers.
“Utility expenses is about 15% of our operating costs,” he said.